Question 1

Upside Software Development Ltd.has agreed in its contract to pay damages of $500 per day for each day that it is late in delivering the agreed upon software program to its client.What is this type of contract clause?
A) a condition precedent
B) a limitation of liability clause
C) a liquidated damages clause
D) an exemption clause

Accepted Answer

The answer of Upside Software Development Ltd.has agreed in its...

Question 2

What would a negotiator most likely caution against with respect to the notion of building flexibility into contractual agreements?
A) the risk of having no contract at all if the resulting document is too unfixed
B) the risk that the parties will be allowed to terminate the contract altogether
C) the risk of having the parol evidence applied regarding evidence of intent
D) the risk that voluntarily altering the contract will make it unenforceable

Accepted Answer

Flexibility in contracts, while beneficial for adapting to unforeseen circumstances, can lead to a document so vague or unfixed that it fails to meet the criteria of a binding agreement, thus posing the risk of having no enforceable contract at all.

Question 3

What is the legal term given to a clause that makes a contract enforceable against a buyer only if the buyer is able to secure a satisfactory building inspection?
A) a liquidated damages clause
B) a limitation of liability clause
C) a condition subsequent
D) a condition precedent

Accepted Answer

The answer of What is the legal term given to...

Question 4

What is the legal effect of a condition precedent?
A) It prevents a contract from coming into existence if a particular condition is not met.
B) It relieves a party from performing a contract if a particular condition is not met.
C) It is a term that,if breached,entitles the other party to cancel the contract.
D) It permits a party to limit liability for damages.

Accepted Answer

The answer of What is the legal effect of a...

Question 5

What is meant by the term "contractual quantum meruit"?
A) as much as merited or deserved
B) a term required to imply payment
C) as much as someone will pay
D) a promise to pay a fair price

Accepted Answer

"Contractual quantum meruit" refers to the principle of paying someone as much as they have merited or deserved for their work or services, rather than a pre-agreed fixed sum.

Question 6

In what manner could you reasonably expect a court to apply the parol evidence rule when asked to interpret the meaning of a nebulous term in a written contract?
A) Abide by the rule and use its discretion to infer a clarification of the term.
B) Disregard the rule and allow extrinsic evidence to resolve the ambiguity.
C) Abide by the rule and use its discretion to apply implied terms for clarification.
D) Disregard the rule and apply the reasonable person test to interpret the term.

Accepted Answer

The parol evidence rule generally prohibits the admission of extrinsic evidence to alter, contradict, or add to the terms of a written contract. However, when a term in a contract is ambiguous or unclear, courts may allow extrinsic evidence to clarify the meaning of the nebulous term, thus making option B correct.

Question 7

Wee Ones Safety Ltd.manufactures child car carriers and has agreed to provide 2000 statutorily compliant car seats to a department store chain.If the government changes the regulations and Wee Ones' production costs rise accordingly,what is the legal position of Wee Ones in its contract with the chain?
A) The doctrine of frustration holds that the terms of a contract are settled at the time of acceptance and Wee Ones will have to comply with its original contract terms.
B) The doctrine of frustration is a reliable avenue of escape for Wee Ones.
C) The doctrine of frustration will allow Wee Ones to modify its contract to incorporate the regulatory changes and its increased production costs.
D) The doctrine of frustration will not apply unless the parties have specifically referenced it in their contract.

Accepted Answer

The doctrine of frustration applies when unforeseen events fundamentally change the nature of a contract's obligations, making performance impossible, illegal, or radically different from what was agreed. However, it does not typically cover situations where a contract becomes more expensive or difficult to perform due to changes in law or regulations. Therefore, Wee Ones would still be bound by its original contract terms despite the increased production costs.

Question 8

ABC Electrical Inc.has a contract with a building contractor that provides that in the event of breach,ABC will be entitled to damages of $10 000.Which of the following best describes this type of contract term?
A) a liquidated damages clause
B) a condition precedent
C) an exemption clause
D) a limitation of liability clause

Accepted Answer

A liquidated damages clause specifies a predetermined amount of money that must be paid as damages for failure to perform under a contract. This clause is used when actual damages may be difficult to calculate.

Question 9

Why would a businessperson use contractual terms as a planning feature of the law?
A) to limit liability and block the use of the parole evidence rule
B) to limit liability and shield against possible future events
C) to limit liability and prevent collateral oral agreements
D) to limit liability and buffer against certain future events

Accepted Answer

Contractual terms are used to limit liability and shield against possible future events by clearly defining the obligations and rights of each party, thus providing a framework for addressing unforeseen circumstances.

Question 10

What principle could you reasonably expect Canadian common law courts to apply when faced by cases dealing with standard form contracts?
A) Customers' continued use amounts to acceptance of unilateral amendments.
B) Terms are to be set out in plain language,and legalese must be absent.
C) Pre-printed terms are put inside a box to which reference is made on the outside.
D) Ambiguous terms should be construed against the party that prepared the contract.

Accepted Answer

The principle that ambiguous terms should be construed against the party that prepared the contract is known as the "contra proferentem" rule. This rule is commonly applied in common law jurisdictions, including Canada, especially in the context of standard form contracts or contracts of adhesion, where there is an imbalance in bargaining power and the non-drafting party has little to no ability to negotiate the terms.

Question 11

Kramer and Biff entered into a formal purchase and sale agreement with respect to Kramer's house.Two weeks later,Biff revisited Kramer and offered to purchase all of Kramer's custom yard and deck furniture too.The price Biff offered was $2500 more than the last offer Kramer had received,and he accepted the offer.In these circumstances,if a dispute ensues,will the parol evidence rule play a role?
A) It will be used to prevent extrinsic evidence regarding the oral agreement.
B) It will not play a role; because the oral agreement deals with land and furniture,it is invalid.
C) It will be applied to prevent a challenge of the written agreement.
D) It will not play a role,owing to the distinct nature of the collateral contract and price.

Accepted Answer

The parol evidence rule generally prohibits the introduction of evidence of prior or contemporaneous oral agreements that would contradict a later written contract. However, in this case, the oral agreement regarding the yard and deck furniture is a separate and distinct transaction from the sale of the house, and it involves a different subject matter (personal property vs. real property). Therefore, the parol evidence rule would not prevent the introduction of evidence about this separate agreement, especially since it does not contradict the terms of the written house sale agreement.

Question 12

Under the UEEA,which of the following would immediately tell you that you have satisfied the best evidence rule with respect to an electronic record?
A) proving the authenticity of an electronic record is as it was claimed to be
B) proving the integrity regarding the claimed authenticity of the electronic record
C) proving the integrity of the electronic system that recorded the data
D) proving authenticity by producing the original electronic contract

Accepted Answer

The answer of Under the UEEA,which of the following would...

Question 13

Primetime Events has hired the Janglers to perform at its concert hall,but the contract provides it can be cancelled if Primetime cannot sell more than 1000 tickets before December 1.What is the name given to the term that would allow Primetime to cancel the contract?
A) escape clause
B) exclusion clause
C) condition precedent
D) condition subsequent

Accepted Answer

This term is known as a "condition subsequent," which refers to a condition in a contract that, if it occurs, can alter the parties' obligations or terminate the contract. In this case, if Primetime Events cannot sell more than 1000 tickets before December 1, it can cancel the contract with the Janglers, making it a condition subsequent.

Question 14

Marty has made his acceptance of an offer to purchase his house subject to his lawyer's approval.Why did Marty's lawyer advise him that it was essential for him to do so?
A) to ensure contractual obligations Marty incurs are limited to certain circumstances
B) to ensure that any price-variation clause will be detected and eliminated
C) to ensure that Marty will receive a fair price without losing the sale altogether
D) to avoid having to negotiate a higher price to compensate for market changes

Accepted Answer

A lawyer's approval condition allows Marty to ensure that the contractual obligations he is about to enter into are limited to circumstances that are legally sound and in his best interest, providing a safeguard against unfavorable terms.

Question 15

Which of the following is a distinguishing characteristic of a limited liability clause?
A) It relieves or limits liability of a party for damages in particular circumstances.
B) It may be used to punish parties for non-compliance with contractual promises.
C) It requires the parties to purchase insurance.
D) It relieves parties in a variety of circumstances from contractual obligations.

Accepted Answer

A limited liability clause specifically aims to relieve or limit the liability of a party for damages under certain conditions, rather than punishing non-compliance, mandating insurance purchase, or broadly relieving parties from contractual obligations.

Question 16

Which of the following would automatically end a contract with a supplier if the buyer's sales fall below a stated level?
A) an exemption clause
B) a condition precedent
C) a liquidated damages clause
D) a condition subsequent

Accepted Answer

A condition subsequent is a contractual provision that can terminate the contract if a specific event occurs, such as the buyer's sales falling below a stated level.

Question 17

Under what circumstances might a court apply the "Best Evidence Rule"?
A) if the parties have entered into an oral contract with witnesses
B) when interpreting an implied term in a written contract
C) when applying an electronic contract
D) where evidence has been lost before trial

Accepted Answer

The "Best Evidence Rule" requires the original document to be produced when the contents of a writing are at issue, which is relevant in cases involving electronic contracts.

Question 18

What is the term given to the guiding principles for interpreting the terms of a contract?
A) Thompson's Rules
B) The Rules of Construction
C) The Rules of Interpretation
D) The Parol Evidence Rules

Accepted Answer

The Rules of Construction are the guiding principles used to interpret the terms of a contract, ensuring that the intentions of the parties are honored and the contract is applied correctly.

Question 19

What legislation would you need to rely on if you want to ensure that terms are implied in a contractual business arrangement?
A) the Commercial Transactions Act
B) the Electronic Commerce Act
C) the Goods and Services Act
D) the Sale of Goods Act

Accepted Answer

The Sale of Goods Act often includes provisions for terms to be implied into contracts for the sale of goods, ensuring that goods sold are of satisfactory quality, fit for purpose, and match their description.

Question 20

The parol evidence rule prohibits the introduction of a specific type of evidence relating to the terms of a contract when the language used in that document is clear.What is the second condition required to invoke the parol evidence rule?
A) Neither party can prove adverse affects of a documentary mistake.
B) Neither party is able to support its interpretation of the contract.
C) The restriction of the contractual content to the document is intentional.
D) Fraud by one party affecting formation of the contract was intentional.

Accepted Answer

The parol evidence rule is invoked when the parties intend for their written contract to be the complete and final expression of their agreement, thus excluding any prior or contemporaneous oral or written statements. This is known as the integration clause, which is the essence of choice C.

Quiz 7: The Terms of a Contract

Upside Software Development Ltd.has agreed in its contract to pay damages of $500 per day for each day that it is late in delivering the agreed upon software program to its client.What is this type of contract clause?

What would a negotiator most likely caution against with respect to the notion of building flexibility into contractual agreements?

What is the legal term given to a clause that makes a contract enforceable against a buyer only if the buyer is able to secure a satisfactory building inspection?

What is the legal effect of a condition precedent?

What is meant by the term "contractual quantum meruit"?

In what manner could you reasonably expect a court to apply the parol evidence rule when asked to interpret the meaning of a nebulous term in a written contract?

ABC Electrical Inc.has a contract with a building contractor that provides that in the event of breach,ABC will be entitled to damages of $10 000.Which of the following best describes this type of contract term?

Why would a businessperson use contractual terms as a planning feature of the law?

What principle could you reasonably expect Canadian common law courts to apply when faced by cases dealing with standard form contracts?

Under the UEEA,which of the following would immediately tell you that you have satisfied the best evidence rule with respect to an electronic record?

Primetime Events has hired the Janglers to perform at its concert hall,but the contract provides it can be cancelled if Primetime cannot sell more than 1000 tickets before December 1.What is the name given to the term that would allow Primetime to cancel the contract?

Marty has made his acceptance of an offer to purchase his house subject to his lawyer's approval.Why did Marty's lawyer advise him that it was essential for him to do so?

Which of the following is a distinguishing characteristic of a limited liability clause?

Which of the following would automatically end a contract with a supplier if the buyer's sales fall below a stated level?

Under what circumstances might a court apply the "Best Evidence Rule"?

What is the term given to the guiding principles for interpreting the terms of a contract?

What legislation would you need to rely on if you want to ensure that terms are implied in a contractual business arrangement?

The parol evidence rule prohibits the introduction of a specific type of evidence relating to the terms of a contract when the language used in that document is clear.What is the second condition required to invoke the parol evidence rule?